Roundup: Argentine gov't takes steps to stabilize economy amid election uncertainty

0 Comment(s)Print E-mail Xinhua, August 21, 2019
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BUENOS AIRES, Aug. 20 (Xinhua) -- The Argentine government swore in a new finance minister on Tuesday and took other steps to stabilize the country's economy amid the uncertainty of ongoing presidential elections.

At his swearing-in ceremony, new finance minister Hernan Lacunza said Argentina would keep 2019 fiscal targets, while the current priority is to stabilize the peso.

"The idea to anchor, to guarantee the stability of the peso, is to generate predictability, because the fluctuations in the exchange market not only impact the financial sector, but also the productive sector," said economist Jorge Marchini.

Uncertainty among investors is currently Argentina's biggest problem, and it remains to be seen whether Lacunza's strategy will calm jittery markets, he said.

On Aug. 11, Argentine President Mauricio Macri's Together for Change party received a little more than 30 percent of the vote, while the central-left opposition, the Justicialist party led by former cabinet chief Alberto Fernandez, garnered nearly 50 percent.

After the primary round of voting, the peso devalued more than 20 percent against the U.S. dollar, and Argentina's international country risk index exceeded 1,900 basis points.

Argentina will hold general elections on Oct. 27 to choose a new president with the term from 2019 to 2023 and the new government will take office on Dec. 10.

However, disillusioned voters appear opting for a change, which increased the uncertainty and spooked international investors banking on the reelection of business-friendly Macri.

Stabilizing the peso aims "to improve expectations in a very short-term, four months from now. They are trying to stamp out the most uncertain aspects of the economy right now," Marchini said.

No matter who wins the elections, the incoming government will face the tough task of handling Argentina's mounting foreign debt, he added.

Argentina is currently influenced by a monetary crisis, which led to a record loan amounting to nearly 60 billion dollars from the International Monetary Fund (IMF), its largest ever granted. The loan agreement also brought about unpopular austerity measures.

"The debt is one of Argentina's most important and serious problems ... how to deal with it, (and) whether it will require negotiation with the IMF and with investors. That is a problem that is going to be present even during the next (presidential) term," the economist said. Enditem

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